What e-payment companies offer and how to use them

Paying online

An e-payment account provides another way to send and receive money online.

An increasing number of people use e-payment companies because they can make it easier to transfer money and make purchases.

They also mean you don’t have to share your card details.

How does an e-payment account work?

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Using an e-payment company means you don’t have to give out your credit or debit card details when you shop online. This reduces the risk of fraud.

There are two main ways that e-payment accounts work.

You either:

Pay money into your e-money accountusing a payment card. When you shop online the money is deducted from your balance – or if you’re selling things, it’s added to your balance, or

Link your e-money account to your payment card. There’s no actual money in your account. When you buy online the e-payment company charges the money to your card – or pays it to your card, if you’re selling things.

How to use an e-payment company

The first step is choosing which e-payment company to use. Popular choices include PayPal and Google Checkout.

Once you’ve picked a company, most will ask you to:

Set up an account - register your details and follow the instructions.

Connect a bank card - enter your credit or debit card details.

Once you’re registered, you’ll be able to pay for purchases using your new account details.

What does it cost?

It’s usually free to use e-payment services to buy things (though you might be charged for selling).

These companies make their money by charging retailers.

You might be charged for making or receiving payments in foreign currencies, or if you spend more money than you have access to.

What are the drawbacks?

E-payment companies are not protected by the Financial Services Compensation Scheme.

This means you might not get compensation if your e-payment company goes out of business.

Even if you pay using a credit card through PayPal, or similar service, you will not get the additional protection under section 75 of the Consumer Credit Act.